1/24/25 8:58 PM

The Davos World Economic Forum: A History of Global Collaboration and ESG Integration

The World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, is more than just a gathering of the global elite. It's a platform for leaders from business, government, and civil society to discuss and shape the global agenda. This article delves into the genesis and history of the WEF, explores the key discussions and outcomes of the 2025 meeting, and examines the organization's increasing focus on Environmental, Social, and Governance (ESG) factors.

Founding and History of the WEF

The WEF was founded in 1971 by German economist Klaus Schwab as a not-for-profit foundation¹. Initially called the "European Management Forum," it aimed to promote better management techniques and a broader "social consciousness" in doing business¹. Schwab's vision of "stakeholder capitalism" emphasizes the importance of creating value not just for shareholders but for all stakeholders, including employees, society, and the planet². This concept quickly became a guiding principle for the WEF, formalized in the "Davos Manifesto" drafted in 1973¹. The WEF's mission is to "improve the state of the world" by fostering cooperation between the public and private sectors³.

The WEF's commitment to facilitating progress on systemic challenges is furthered through its 10 Centers³. Each Center applies the institution's unique combination of impact methods to drive holistic efforts and build communities of purpose essential to addressing large-scale global challenges³.

Over the years, the WEF has played a significant role in facilitating global dialogue and cooperation. Some notable achievements include:

1988: Averted armed conflict between Greece and Turkey⁴.
1990s: Helped to end apartheid in South Africa⁴.
2000: Launched the UN Global Compact, which encourages companies to align their operations with human rights principles⁴.
1998: Gave rise to the G20⁴.
2000: Launched GAVI, the Vaccine Alliance⁴.

A Timeline of WEF History

Here's a closer look at some key milestones in the WEF's journey:

1971: The first "European Management Forum" is held in Davos, Switzerland, with 450 participants from 31 countries¹.
1973: A discussion on "The Limits to Growth" raises concerns about the sustainability of global economic growth. The first "Davos Manifesto" is drafted, outlining a code of ethics based on stakeholder capitalism¹.
1976: The WEF launches a program with the United Nations Industrial Development Organization (UNIDO) to support emerging economies¹.
1979: A delegation from the People's Republic of China participates in Davos for the first time, marking the beginning of a long-standing relationship between the WEF and China¹.

The WEF's annual meeting in Davos has become synonymous with the organization itself. Held every January, it brings together a diverse group of leaders to address the most pressing issues of the day². The "Davos Manifesto," renewed in 2020, outlines the principles of stakeholder capitalism, aligning with the UN Sustainable Development Agenda⁴.

Davos 2025: Key Discussions and Outcomes

The 2025 WEF Annual Meeting, themed "Collaboration for the Intelligent Age," focused on five interconnected priorities: reimagining growth, navigating industries in the intelligent age, investing in people, safeguarding the planet, and rebuilding trust².

Geopolitical Shifts and Economic Outlook

The global implications of Donald Trump's return to the White House were a major focus of debate, particularly his policies on tariffs, deregulation, and energy⁵. Trump stated, "America is back and open for business," and pledged to lower corporate taxes and impose tariffs on companies not manufacturing in America⁶. He also suggested that Canada could become the 51st state to resolve the US trade deficit⁶. Leaders like Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), advised "cautious optimism" as these policies are enacted⁵.

The conflict in Ukraine, now in its third year, was also a key topic. Ukrainian President Volodymyr Zelenskyy urged Europe to increase defense spending, stating, "If it takes 5% of GDP to cover defense, then so be it. 5% it is." ⁷

Climate Change and Sustainability

The escalating climate crisis was another prominent theme. The effects of climate change are evident across the globe, with the number of extreme weather events increasing five-fold in the past 50 years⁵. Climate-change-fueled disasters have caused over $3.6 trillion in damage since 2000⁵. In his virtual address, Trump emphasized the need for increased energy production to support AI development, suggesting "good clean coal" as a backup power source⁵. This sparked debate about balancing energy security with the need for a clean energy transition⁵.

Economic Growth and Finance

Soaring levels of global public debt troubled economists. "We need an absolute pivot, because this is not business as usual," said IMF Deputy Chief Gita Gopinath. "It is worse than you think." ⁵ The world has accumulated about $100 trillion in public debt, making it more expensive to manage with rising interest rates⁵.

Artificial Intelligence and Technological Advancements

With "Industries in the Intelligent Age" as a key theme, the potential of agentic AI was widely discussed⁵. Sessions focused on AI applications in manufacturing, decarbonization, climate action, and healthcare⁵. The meeting also explored the implications of AI for governments and national security⁵.

India's Economic Future

Discussions about India's economic future centered on sustaining growth amid global uncertainties⁸. The IMF projected 6.5% growth for India, suggesting further gains could be achieved by lowering tariffs and deepening global integration⁸. Key themes included:

Moving beyond low-skilled manufacturing: Experts advocated for India to focus on design, R&D, marketing, and services to create higher value in the production process⁸.
Addressing gender parity: Leaders stressed the need to overcome structural challenges hindering women's participation in the workforce⁸.
Skilling and the demographic dividend: India's large and young population presents a significant opportunity, but requires investment in education and skills development to realize its full potential⁸.
Startup revolution and expansion beyond big cities: Promoting innovation and entrepreneurship in smaller cities and towns is crucial for inclusive growth⁸.
Leveraging digital innovation in healthcare: Technology can play a transformative role in improving healthcare access and affordability in India⁸.

Open Forum Davos

Since 2003, the WEF has hosted the Open Forum Davos, which offers free public access to events and discussions upon registration⁴. This initiative aims to engage a wider audience and promote dialogue beyond the exclusive circles of the Annual Meeting.

Five Key Numbers that Distil Davos 2025

The following figures captured key themes and concerns at Davos 2025: ⁷

$100 trillion: The world's accumulated public debt, raising concerns about fiscal sustainability.
5% of GDP: The level of defense spending urged by Ukrainian President Zelenskyy for Europe.
40% of the planet's land: The portion affected by desertification, highlighting the urgent need for action on climate change and land degradation.
5-year AI shelf life: Meta's chief AI scientist predicted a new paradigm of AI architectures within five years, emphasizing the rapid pace of technological change.
33% in government: The target for women's representation in government, reflecting the ongoing need to close the gender gap in political leadership.

The WEF and ESG: A Deepening Relationship

The WEF has increasingly emphasized the importance of ESG factors in shaping a sustainable future. There is growing evidence that companies with strong environmental and social responsibility perform better financially⁹. Recognizing the growing demand for ESG reporting, the WEF, in collaboration with the Big Four accounting firms, launched the "Measuring Stakeholder Capitalism" initiative in 2019¹⁰. This initiative provides a set of universal ESG metrics and recommended disclosures to promote greater comparability and consistency in corporate reporting¹¹.

The WEF's ESG framework revolves around four pillars: People, Planet, Prosperity, and Principles of Governance¹⁰. It includes 21 core metrics and 34 expanded metrics, covering a wide range of ESG issues¹⁰. The framework aligns with other leading ESG reporting standards, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI)¹². This alignment helps streamline ESG reporting and enhance stakeholders' understanding of a company's ESG performance¹².

The WEF's focus on ESG is driven by several factors:

Growing investor interest: Investors are increasingly incorporating ESG factors into their decision-making, recognizing the link between sustainability and financial performance⁹. A McKinsey survey revealed that roughly 85% of Chief Investment Officers believe ESG plays a key role in their investment decisions⁹.
Increased stakeholder pressure: Employees, customers, and communities are demanding greater transparency and accountability from companies on their ESG performance¹³.
The need for a sustainable future: The WEF recognizes that addressing global challenges like climate change and social inequality requires a holistic approach that integrates ESG considerations¹⁴.

The WEF promotes ESG integration through various initiatives and programs, including:

Stakeholder Capitalism Metrics: Encouraging companies to adopt and report on a standardized set of ESG metrics¹². These metrics provide a common language for businesses to communicate their ESG performance and demonstrate their commitment to sustainability.
ESG Accelerator: Providing guidance to water and wastewater utilities on ESG reporting and demonstrating how they can contribute to a sustainable future¹⁵. This program helps utilities understand ESG requirements, share best practices, and leverage their resources to support broader sustainability goals.
Collaboration with partners: Working with companies and organizations to promote ESG best practices and drive progress on sustainability goals¹³. For example, Amazon Web Services, a WEF partner, focuses on "engineering for sustainability" by optimizing its cloud infrastructure for lower energy consumption and utilizing renewable energy sources¹³.
WEF ESG Webcast: This webcast introduces the topic of ESG, covering reporting frameworks, investor perspectives, and the role of ESG in driving investment, branding, and talent retention¹⁵.
SDG Theater at WEFTEC: This annual event showcases projects and initiatives aligned with the UN Sustainable Development Goals, highlighting the water sector's role in achieving a sustainable future¹⁵.

Impact of the WEF's ESG Focus

The WEF's focus on ESG has a significant impact on businesses and the global economy:

Driving corporate transformation: Companies are increasingly integrating ESG considerations into their strategies and operations, leading to initiatives such as new approaches to water management, biodiversity strategies, and sustainable supply chains¹². For instance, JLL, a real estate company, encourages its teams and clients to agree on water management plans and targets, influenced by the WEF's core metric on water consumption¹².
Influencing investment decisions: The growing emphasis on ESG reporting is providing investors with more comprehensive information to assess the long-term value and sustainability of companies¹⁶. ESG is becoming increasingly important from an investor perspective, with around 85% of Chief Investment Officers considering it a pivotal factor in their investment decisions¹⁶.
Promoting innovation: The WEF's focus on ESG is encouraging companies to develop and adopt sustainable technologies and practices, driving innovation and economic growth¹⁶.
Enhancing corporate reputation: Companies that demonstrate strong ESG performance are building trust with stakeholders and enhancing their reputation, leading to increased brand value and customer loyalty¹⁶.
Shifting capital allocation: The increasing use of ESG metrics by investors and companies is influencing capital allocation, directing investments towards more sustainable businesses and projects¹⁷. This shift is accelerating the transition to a cleaner and more resilient economy.

Criticisms and Controversies

Despite its positive contributions, the WEF and its focus on ESG have faced criticisms:

Exclusivity: Critics argue that the WEF is dominated by the global elite and lacks representation from diverse voices¹⁸. This raises concerns about the inclusivity and representativeness of the WEF's agenda and its ability to address the needs of all stakeholders.
Greenwashing: Concerns have been raised about companies using ESG reporting as a PR tool without making genuine efforts to improve their sustainability performance¹⁹. This undermines the credibility of ESG initiatives and can mislead investors and the public.
Lack of standardized measurement: The absence of a universally accepted ESG scoring system has led to inconsistencies and difficulties in comparing companies' performance¹⁹. This makes it challenging for investors and other stakeholders to assess and compare the sustainability performance of different companies.
Complexity and difficulty of implementation: Some companies find it challenging to navigate the complex ESG landscape and implement effective sustainability initiatives¹⁹. This can be a barrier to wider adoption of ESG principles and practices.
Concerns about ESG investing: Some investors have expressed doubts about the accuracy of ESG ratings and the perceived hypocrisy of certain high-scoring companies²⁰. These concerns highlight the need for greater transparency and standardization in ESG reporting.
Schneider Electric's open letter: Schneider Electric criticized the Davos agenda for not adequately addressing the economic implications of climate adaptation, biodiversity financing, and resilience building²¹. They urged the WEF to elevate these topics to the same level of importance as trade, technology, and geopolitics²¹.
Allegations of corporate capture and undemocratic decision-making: The WEF has faced criticism for its close ties to corporations and its perceived influence on global and democratic institutions²². Concerns have also been raised about the lack of transparency and accountability in the WEF's decision-making processes.

Conclusion: The WEF's Continuing Role in Shaping a Sustainable Future

The WEF has played a crucial role in fostering global cooperation and promoting stakeholder capitalism for over five decades. Its increasing focus on ESG reflects the growing recognition that sustainability is essential for long-term economic growth and societal well-being. While challenges and criticisms remain, the WEF continues to be a significant platform for shaping the global agenda and driving progress towards a more sustainable and inclusive future.

The WEF's efforts to integrate ESG considerations into the global dialogue are crucial in addressing pressing challenges like climate change, social inequality, and economic instability. However, the organization must also address the criticisms leveled against it, particularly regarding exclusivity, transparency, and the potential for greenwashing. By embracing greater inclusivity, promoting robust ESG standards, and ensuring genuine commitment to sustainability from its participants, the WEF can strengthen its role as a catalyst for positive change.

The future of ESG holds immense potential to reshape the global economy and business practices. As technology continues to advance, tools like AI and IoT can be leveraged to improve ESG reporting, enhance sustainability performance, and drive innovation in areas like climate action and resource management. The WEF, with its convening power and global reach, can play a vital role in fostering collaboration and accelerating the transition to a more sustainable and equitable future.

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ESG (Environmental, Social, and Governance)